Eurozone rules fly out the window again

17th November 2005, Comments 0 comments

BRUSSELS, Nov 17 (AFP) - The European Commission said on Thursday that France, Germany, Greece, Italy and Portugal would breach the deficit guidelines laid down for countries using the single currency for the next three years.

BRUSSELS, Nov 17 (AFP) - The European Commission said on Thursday that France, Germany, Greece, Italy and Portugal would breach the deficit guidelines laid down for countries using the single currency for the next three years.

The EU's executive body said that the countries, currently the subject of an excessive deficit procedure from Brussels, would be unlikely to rein in their public deficits below 3.0 percent of gross domestic product (GDP) before 2008.

The EU's fiscal rulebook, the 1997 Stability and Growth Pact, requires EU member states to keep their deficits to less than three percent but the rule has long been flouted by France and Germany in particular.

Eurozone countries in theory face the threat of sanctions if they do not rein in their deficits although there is little chance that rule will be applied any time soon.

"Overall, current policies are expected to be insufficient to bring the deficit below the reference value by the end of the forecast horizon in any of the euro-area member states which are currently under the excessive deficit procedure," the commission said in its latest economic forecasts.

Among eurozone countries in the fiscal doghouse, Germany saw its deficit forecast raised to 3.9 percent for this year from 3.3 percent and to 3.7 percent from 2.8 percent for 2006. Its 2007 deficit is forecast at 3.3 percent.

The commission raised its French deficit forecast for this year to 3.2 percent from 3.0 percent, and to 3.5 percent from 3.4 percent for 2006. France's 2007 deficit is forecast told hold steady at 3.5 percent.

Greece's deficit forecast for 2005 was eased to 3.7 percent from 4.5 percent for 2005, and to 3.8 percent from 4.4 percent. Its 2007 deficit is also predicted to hold steady at 3.8 percent.

The commission increased its estimate for Italy's deficit to 4.3 percent from 3.6 percent for this year, but cut it to 4.2 percent from 4.6 percent for 2006. The Italian deficit is seen rising again, to 4.6 percent, in 2007.

Portugal is now seen posting a deficit of 6.0 percent this year instead of 4.9 percent, and 5.0 percent in 2006 rather than 4.7 percent. It is forecast to ease to 4.8 percent in 2007.

Outside the eurozone, Britain is projected to post a deficit of 3.4 percent this year, 3.3 percent in 2006 and 3.0 percent in 2007.

The commission said a total of 12 of the EU's 25 member states will exceed the 3.0 percent ceiling laid down pact.

Copyright AFP

Subject: French news

0 Comments To This Article